Latest Insights

The Houston Retail market continues to be the healthiest of Houstona€™s commercial real estate markets. The overall vacancy rate has remained steady quarter to quarter, ranging from 4.8% to 5.1%. Additionally, as of 4Q23, Houston recorded a total absorption of 2.8 million SF over the past 12 months. This absorption was predominantly concentrated in the general retail sector (1.8 million SF) and neighborhood center segment (120,000 SF). Because of this, Houston secured the second position nationally in terms of new demand during this period. As the year progresses, we should see more space being absorbed and demand continue to heighten.

The resiliency of the Houston retail market is being tested while absorbing the three-year high of new supply and dealing with an uncertain economy. A total of 4.5 million SF of new supply was delivered to the Houston market in 2021 and 2022. In 2023 the new construction pipeline expects to deliver approximately 4.9 million SF. Furthermore, the vacancy rate of 4.9% remained unchanged in 3Q23. The lack of construction in 2022 is a leading cause of the current vacancy rate. However, with most of the current new construction to be completed by the end of 2023, we forecast the vacancy rate to level off over the next few quarters.

Houstona€™s population growth in the past 12 months has motivated retailers to launch and expand local businesses. This increased growth has elevated the Houston retail market to the third strongest market in the nation when it comes to new demand. The Houston retail market availability rate is 5.7% as of 2Q23, which balances out the high demand and low supply within the last year. To keep up with residential growth, more than 4.2 million SF of new retail space is expected to be delivered to the market this year, which is 3 times more than what was delivered in 2022. In 2024, we will determine if the market will be able to absorb that much new inventory without affecting rental rates.